News

CMBS Market Week in Review: November 6th – November 10th

Due to the recent strength of the cash markets, CMBS trading desks posted heavy activity in the past week with bid list volume topping $800 million between Monday and Thursday. Overall, the cash sector continued to see modest spread tightening, decent two-way trading, as well as strong representation from SASB and conduit paper. Tight AAA pricing on new issues and concerns over future supply wind-down enabled cash spreads to grind tighter by an additional five to 15 basis points, on the week.

The CMBX indexes, on the other hand, underperformed the cash segments thanks to some sizable widening up and down the capital stack. From a weekly perspective, CMBX 6/7/8/9/10 AAA spreads came out by one to three basis points while BBB- spreads at the lower end of the credit curve widened between 13 and 16 basis points for series 7-10. The biggest spread blowout for the week, however, came from CMBX 6 where spreads moved out by roughly 26 basis points – the widening may have resulted from the release of weak retail earnings coupled with the market reaction to news surrounding Sears/Kmart closures.

According to a preliminary review conducted by Commercial Mortgage Alert regarding upcoming deals in the CMBS pipeline, total issuance in 2017 is projected to reach up to $100 billion as activity surges in the last quarter. Driven by spread compression amid the recent CMBS rally, many issuers are rushing to clear their loan inventories prior to year-end in order to ride on the momentum of the present, favorable pricing environment.